Thursday, July 19, 2018
The Zacks Research Daily presents the best research output of our analyst team. Today's Research Daily features new research reports on 16 major stocks, including Wells Fargo (WFC), IBM (IBM) and Abbott (ABT). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
You can see all of today’s research reports here >>>
Buy-ranked Wells Fargo’s shares have outperformed the Zacks Major Banks industry over the last three months (+7.6% vs. +1.1%). However, the company possesses a disappointing earnings surprise history, having beaten expectations in only one of the trailing four quarters.
The company’s second-quarter 2018 results were impacted by lower mortgage banking revenues and high expenses. Lower provisions and higher net interest income aided results. Following the sales scandal and other issues, Wells Fargo has been slapped with new sanctions, including a cap on the assets position by the Federal Reserve.
Though lower tax rate, easing of regulations and expansions will likely support the bank’s growth profile, the Zacks analyst thinks the crisis related to the revelation of illegally opening millions of accounts in 2016, auto-lending issues and impact of other malpractices will take some time to alleviate. Nevertheless, the recent 2018 capital plan approval boosts investors' confidence.
(You can read the full research report on Wells Fargo here >>>).
Shares of IBM have underperformed the broader market on a year-to-date basis, losing -5.8% vs. the S&P 500’s +5.6% gain. IBM’s second-quarter 2018 top-line benefited from strong demand for z14 Mainframe and Power products. Moreover, improving pre-tax margin and lower share count drove earnings growth. However, the Zacks analyst thinks IBM will find it difficult to sustain the Mainframe momentum in the long haul.
Nevertheless, the company’s improving position in the cloud, security and analytics bodes well. Moreover, accretive acquisitions have expanded IBM’s product portfolio into higher-growth segments, such as cloud computing, AI and Big Data.
The strategic imperatives will take some more time to report meaningful growth and offset weakness in the traditional business. IBM’s ongoing heavily time-consuming business model transition to cloud continues to hurt the stock.
(You can read the full research report on IBM here >>>).
Buy-ranked Abbott’s shares have gained +27.3% over the last year, outperforming the Zacks Medical Products industry, which has gained +12.3% over the same period. In the second quarter 2018, Abbott has once again posted better-than-expected earnings and revenues numbers.
The Zacks analyst likes the strong and consistent performance across all segments by Abbott. Within Structural Heart, worldwide strong uptake of MitraClip therapy improves further following the recent FDA approval of its next-generation version. This apart, synergies from Alere consolidation in the form of revenues from Rapid Diagnostics have been driving growth.
Meanwhile, emerging market performance has been extremely promising. The company has been taking the limelight within Diabetic Care on progress with its FreeStyle Libre. On the flip side, sluggish Vascular business continues to dent growth. However, the FDA approval for XIENCE Sierra coronary stent system as well as a reimbursement approval in Japan should help Abbott to revive the dull Vascular business.
(You can read the full research report on Abbott here >>>).
Other noteworthy reports we are featuring today include Texas Instruments (TXN), Crown Castle (CCI) and Praxair (PX).
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Note: Sheraz Mian heads the Zacks Equity Research department and is a well-regarded expert of aggregate earnings. He is frequently quoted in the print and electronic media and publishes the weekly Earnings Trends and Earnings Preview reports. If you want an email notification each time Sheraz publishes a new article, please click here>>>
Today's Must Read
Interest Income, Streamlining Support Wells Fargo (WFC)
Strong Demand for z14 Mainframe & Power Aids IBM Corp (IBM)
Abbott (ABT) to Boost Dull Vascular Arm with Xience Sierra
Texas Instruments (TXN) Benefits From Strong Auto Growth
The Zacks analyst believes that strong demand in auto and industrial markets, solid cash generation capabilities and continued dividend hikes are positives for Texas Instruments.
Tazemetostat Efforts to Lift Epizyme (EPZM), Amid Competition
Per the Zacks analyst, Epizyme's efforts on developing its lead candidate, Tazemetostat, for a number of hematological malignancies are impressive.
Verisk (VRSK) Rides on Data Analysis Strength Amid High Debt
The Zacks analyst is impressed with Verisk's expertise in providing predictive data analytics solution by interpreting different types of data sets.
O'Reilly (ORLY) to Grow from Dual Market Strategy, Expansion
Per the Zacks analyst, selling products to both Do-it-Yourself customers and Do-it-for-Me or professional installers, along with store openings in existing & new markets will aid O'Reilly's growth.
Store & Digital Growth a Boon for Ulta (ULTA), Margins Hurt
Per the Zacks analyst, Ulta Beauty should continue gaining from its marketing and store initiatives while soft operating margins can hurt results.
ONEOK (OKE) Gains From Fee-based Earnings, Regulation Ails
The Zacks analyst believes ONEOK will continue to benefit from its long-term fee-based earnings but stringent regulations could increase compliance costs and impact margins.
Hilton (HLT) Banks on Unit Growth for Long-Term Growth
Per the Zacks analyst, Hilton's scale, size and industry-leading brands continue to drive unit growth.
Growing Card Sales Aid Discover Financial's (DFS) Revenues
Per the Zacks analyst, soaring card sales volumes from past many years due to alliances and partnerships, leading to increase in customers using its cards, have led to revenue growth.
Focus on Fiber Business to Stoke Crown Castle's (CCI) Growth
Per the Zacks analyst, Crown Castle's efforts to expand its fiber business will boost long-term results. Further, healthy leasing activity amid high demand for infrastructure remains a tailwind.
Strategic Buyouts to Aid Emerson Electric's (EMR) Top Line
Per a Zacks analyst, Emerson Electric's acquisitive nature has been a boon over time, while will continue to be advantageous going forward. The company recently completed acquiring Aventics.
Rising Costs, Debt Levels To Hurt Praxair's (PX) Prospects
The Zacks analyst is apprehensive about the fact that Praxair's debt levels remain at high levels and costs are on the rise. If unchecked, these might prove detrimental to the Praxair's profitability.
Dull Subscription Unit Plagues Cerner Corporation (CERN)
Cerner Corporation's growth is currently being marred by softness in the Subscription unit. The Zacks analyst is bearish about lesser-than-expected subscription bookings.
Apache (APA) Hurt by Permian Basin Takeaway Constraints
The Zacks analyst believes that shortage in the Permian takeaway capacity and the resultant discount pricing might not allow the company to fully benefit from higher oil prices for its production.
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Wells Fargo & Company (WFC) : Free Stock Analysis Report
Texas Instruments Incorporated (TXN) : Free Stock Analysis Report
Praxair, Inc. (PX) : Free Stock Analysis Report
International Business Machines Corporation (IBM) : Free Stock Analysis Report
Crown Castle International Corporation (CCI) : Free Stock Analysis Report
Abbott Laboratories (ABT) : Free Stock Analysis Report
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